Практика Shadowing: US Debt Crisis: Interest Payments Are Becoming a Major Problem - Изучайте разговорный английский по видео

In today's video, I want to update you on the U.S debt crisis and here's where we currently stand.

And this is coming from the U.S government's website at treasury.gov.

So the U.S federal government is now in debt by a record high of $39.3 trillion.

And a good question is, how quickly is the government's debt growing?

So the U.S government runs on a fiscal year.

So if something runs from January 1st to December 31st, that's a calendar year.

So the government runs on a fiscal year from October 1st to September 30th.

So fiscal year 2026 is going to be over on September 30th of 2026.

So far into this fiscal year, fiscal year 2026, the U.S government has gone deeper into debts by $1.25 trillion.

Okay, so why has the government gone deeper into debts by $1.25 trillion?

And the answer is very straightforward.

So I want to show you what happened last year in fiscal year 2025.

So in fiscal year 2025, the government spent $7 trillion.

And did the government bring in $7 trillion?

In other words, did the government have tax revenue of $7 trillion?

And the answer is no. The government had revenue or tax collections of $5.23 trillion.

Okay, so how do you spend $7 trillion if you're only bringing in 5.23 trillion.

You're either going to print the money, which devalues the currency and causes inflation, or you're going to borrow the money.

You're going to borrow the difference.

So in this specific fiscal budgeting situation, they are borrowing the money.

Last year, the government brought in 5.23 trillion dollars and they spent 7 trillion, right?

And they funded this overspending by borrowing $1.78 trillion.

So the difference is the deficits or the debts that accumulates.

So here are the annual deficits over the past 25 years.

Again, last year, fiscal year 2025, the deficit was $1.78 trillion.

And there's a few things that I want to point out.

If you take a look at 2001, the government was actually fiscally irresponsible.

The government spent less than it brought in and they were actually at a surplus.

So it is possible to balance the budget, but now, I mean, this is just my opinion.

We've passed the point of no return and there's no chance of balancing the budget anymore.

Another thing that I want to point out is

that these two years saw record deficits because of all the government programs brought on by the pandemic.

But notice after that, the trend is still clearly going up.

I mean, this chart goes up to 2025 because of course, 2026 has not completed yet.

However, let's take a look at how we're doing so far this year in fiscal year 2026.

So here's where we currently stand.

And I would ignore that green line since that was the outlier year from the pandemic 2021.

Now the red line represents fiscal year 2026, and we're at a deficit of $1.25 trillion so far.

And if you want to compare how we're doing so far this year, you'll see that the deficit is slightly less compared to 2025,

which is good, but it's slightly worse than 2023 and 2024.

So it's expected that we're going to end the year at a deficit of around $1.8 trillion, which is going to be comparable to last fiscal year,

which means that the US government will be in debt by $40 trillion around October.

So maybe it's going to happen in September, maybe early November, but we're going to cross that $40 trillion milestone this year.

Now, a very good question is what is all this money being spent on?

So far into this fiscal year, the government has spent $4.9 trillion.

So what is going on?

Where's that money going?

So this is from the government's website.

The number one expense is social security payments.

Now, I want you to take a look at this.

The second largest expense for the the U.S government is the interest that they're paying on their debts.

I mean, this is what happens when you're close to $40 trillion of debts.

The government is spending more on their interest payments than on Medicare, than on health care, than on national defense.

I mean, that's how bad the situation is regarding interest expense, regarding the debt.

Okay, now let me tell you about the problem.

The U.S government borrows money by selling treasury bills, treasury notes, and treasury bonds.

So they're basically selling IOUs to investors, which can be people, institutions, or other countries.

Now, if you want to borrow a ton of money, such as $40 trillion worth, then you need to sell more U.S treasuries, right?

Now, the problem is that there might not be enough demand out there from the investors.

Because again, you're talking about a huge quantity of money.

So in order to motivate people to buy U.S treasuries, which is essentially lending money to the U.S government, the interest rate needs to be higher.

So for example, if the government wants to pay you an interest rate of 3% for lending money to them,

maybe they can sell $5 trillion worth of treasuries to investors, but they're going to need more money than that, right?

So the interest rate needs to go higher to, let's just say, 4% to get more investors.

And if that's not enough, then they're going to have to raise the interest rate.

It will have to go higher to, let's just say, 5%.

And as you can see, over the past five years, the interest rate on U.S.

Treasury bonds has shot up significantly.

And this is simply a function of supply and demand.

So I want you to take a look at this.

This shows how much the U.S government has been paying in interest for the past seven years.

And each year, unsurprisingly, it's been more than the previous year.

So that's simply due to having more debt and higher interest rates.

So here's the interest expense by years.

2020 was at $345 billion.

2021, $352 billion.

2022, $475 billion.

2023, $659 billion.

2024, $882 billion.

2025, $970 billion being paid for interest expense.

And look at where we currently stand for fiscal year 2026, we're paying more interest expense compared to 2025.

So it's going to be above a trillion dollars this year.

So I want you to keep in mind

that the government will collect about five trillion dollars in tax collections

and one trillion of that's going to go towards paying the interest.

That's not even paying down the debts.

I mean, we're talking about just paying the interest.

So that's a problem.

Again, interest expense is now the second largest expense of the U.S government.

So up until May, they've already spent $723 billion in interest expense.

And here's the projection of how much interest expense is going to grow over the coming years.

In my opinion, this is a good scenario if nothing goes awfully wrong.

However, this is just a projection.

And it's my opinion that it's going to be much worse than this.

Because as you can tell, we're just jumping from one emergency to another, one fire to another.

So listen, I just want to say

that it doesn't take a mathematician to understand that these numbers don't work out and it's gonna end badly.

So our country's gonna run into some major fiscal and monetary problems and what's that gonna result in?

Societal problems, civil unrest.

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So you want to get ahead of this for your sake and also for the sake of your family.

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Okay, so what is the solution to this debt crisis.

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And we have some options here.

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So we could either balance the budget and pay down the debts.

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We could print the money.

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We could default on the debts.

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We can try to outgrow the debts or have a currency reset.

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Now, is it possible to balance the budget and pay down the debts?

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And my answer is yes, of course it's possible.

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As I showed you, it's been done before.

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However, balancing the budget and paying down debt is deeply unpopular politically.

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So what What kind of president's going to get elected by saying, we're going to cut your social security payments.

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We're going to offer you fewer programs and we're going to raise your taxes.

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You know, will a president get elected based on that type of campaign?

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And of course not.

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Well, at least that's my opinion that that's not gonna happen.

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I'm just being honest.

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So you know what people vote for?

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You know what people like?

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Free money.

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You know, that's what gets the votes.

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So balancing the budget and paying them debts, in my opinion, it's just not gonna happen.

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Now, if you want to go down this path, just print the money, you know what happens.

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We've all lived through it.

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We get massive inflation.

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And the newly printed money, it's not distributed equally to Americans.

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The rich end up with most of it.

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And then the wealth gap expands, leading to more societal problems.

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And of course, another option would be to just default on the debts.

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So the government could say, you lent us money.

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Well, we're not going to pay you back because we're broke.

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Now, this scenario would just be chaotic.

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Interest rates would sky rocket prices would skyrocket inflation would skyrocket

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and then there would be massive job losses it would basically be like an economic depression

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so they can't even entertain this option

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so currently the u.s government is selecting option number four as the solution they're trying to outgrow the debts

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so if the u.s government can improve the economy by becoming the dominant leader in ai

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if we can bring back manufacturing to the states if we can massively grow the economy

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then the debt to GDP would not look as dangerous.

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But the question is, of course, will we succeed?

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And if we succeed, will it be enough?

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So all I can tell you is that currently the money supply

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and debt is growing at a faster rate than the economy.

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But if all else fails and the currency gets debased too much, then we just go with the last remaining option, which is a currency reset.

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So currency reset is when a government fundamentally changes the monetary system.

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Now, personally, I believe

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that the safest place to hide your hard-earned money to preserve your wealth is in the stock market and also hard assets, such as gold, silver, and real estate.

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Okay, so why do I say the stock markets?

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Like, if you think about it, what are stocks?

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Stocks are ownership in real-life businesses, which are assets.

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So as the currency debases, hard assets and business valuations, they're just going to rise if you're talking about denominating them in US dollars.

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So in my opinion, you don't want to be in cash.

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You don't want to be in bonds.

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It's not going to keep up with inflation.

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You're truly going to be losing purchasing power.

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Now, if you want to see what I'm doing to get ahead of this, come join my investing community.

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So I'm going to leave a link for you down below.

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Thank you so much.

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Please subscribe, and I wish you a very nice day.

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Take care.

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Практика Shadowing: US Debt Crisis: Interest Payments Are Becoming a Major Problem - Изучайте разговорный английский по видео

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